by Jose D. Roman | Feb 10, 2025 | Estate Planning, Guardianship, Power of Attorney
A Springing Power of Attorneyis a legal document that allows someone you appoint as your agent to manage your financial affairs, but only when a specific condition is met—typically, your incapacitation. Unlike a typical Power of Attorney, which takes effect upon signing, a Springing Power of Attorney “springs” to life when you (“the principal”) become unable to handle your own financial matters.
How to Create a Springing Power of Attorney in New Jersey
To create a valid Springing Power of Attorney in New Jersey, be mindful of the following:
- State Clearly that it is Springing: The Power of Attorney should clearly state that it is springing and specify the triggering event, usually incapacitation. The document should also outline how incapacity is determined. In New Jersey, this often requires written certification from two licensed physicians confirming that the principal is unable to manage their affairs.
- Appoint a Trusted Agent: Choose a responsible individual who will act in the your best interest and handle your financial matters effectively.
- Choose Alternates: It is highly recommended that you choose alternate agents in case your first choice is unwilling or unavailable to serve.
- Include Specific Powers: The document should explicitly list the powers granted to the agent, as powers not listed are often not recognized, especially by banks and other financial institutions.
- Meet Legal Requirements: New Jersey law requires the Power of Attorney to be signed before a notary public or an attorney. Because other states may require two witnesses as well, it is recommended that you also sign it before two witnesses. Any person you are designating as an agent should not serve as a witness.
- Distribute Copies: Provide copies to the appointed agent, financial institutions, and any relevant parties who may need to recognize the Power of Attorney when the time comes. Keep the original in a safe place that is accessible by your agent.
Why Choose a Springing Power of Attorney?
A Springing Power of Attorney offers additional protections over an immediate Power of Attorney. Reasons people may choose a Springing Power of Attorney often include:
- Discomfort with Relinquishing Control: Since the agent’s authority only activates upon incapacity, the principal retains sole control of their financial affairs while competent. With an immediate Power of Attorney, your agent may act right away, which may not be desirable if you are uncomfortable with the idea of an immediate Power of Attorney.
- No Close Relatives or Friends Available: Individuals often appoint their spouse, children or a close friend as agent. If you don’t anyone close to you who can serve as your agent, you may want to opt for a Springing Power of Attorney.
- Trust Issues: Perhaps you don’t completely trust your designated agent but still want to appoint the person in case something happens to you. A Springing Power of Attorney may be the appropriate solution in these circumstances.
Ultimately, aSpringing Power of Attorney provides a safeguard against financial mismanagement, as no one can act on the principal’s behalf unless they truly become incapacitated. However, there are potential downsides. Proving incapacity can be challenging, as physicians may be hesitant to certify incompetency, and financial institutions may require additional proof before recognizing the agent’s authority. After all one of the purposes of having a Power of Attorney is to make your life and your loved one’s lives easier often during a difficult time. A Springing Power of Attorney may add extra hurdles and stress.
When Does a Springing Power of Attorney Go Into Effect?
A Springing Power of Attorney becomes effective upon the happening of a condition specified in the document — most commonly when the principal is deemed incapacitated. Typically, this means:
- Two physicians certify in writing that the principal is mentally or physically unable to manage their own affairs.
- The agent presents these certifications along with the Power of Attorney document to banks and financial institutions.
- The entity accepting the Power of Attorney determines that the incapacity provisions have been satisfied.
Because banks and other financial institutions may have their own standards for verifying incapacity, the agent might face hurdles in getting the Power of Attorney recognized. To avoid complications, you should inquire about any such issues with your financial institutions ahead of time and consider opting for an immediate Power of Attorney.
Is a Springing Power of Attorney Different from a Durable Power of Attorney?
No is the short answer. A Durable Power of Attorney remains valid even after the principal becomes incapacitated. However, a Durable Power of Attorney can be either immediate (effective upon signing) or springing (effective upon incapacity). All springing Powers of Attorney must be durable; otherwise, they would become invalid when the principal loses capacity, defeating their purpose.
Conclusion
A Springing Power of Attorney in New Jersey can be a valuable tool for those who wish to retain sole control over their finances while they are capable but ensure that someone can manage their affairs if needed. When drafting a Springing Power of Attorney, it is crucial to carefully define the terms of incapacity and ensure that the document meets all legal requirements to avoid delays or challenges in enforcement. Consulting an estate planning attorney can help tailor a Power of Attorney to fit individual needs and ensure it aligns with New Jersey law.
by Jose D. Roman | Jan 23, 2025 | Guardianship, Legal Bulletin, NJ Supreme Court
On December 11, 2024, the New Jersey Supreme Court issued its opinion for In the Matter of A.D., (A-30/31-23) (088942) addressing whether court-appointed attorneys and temporary guardians are entitled to fee awards from Adult Protective Services (APS) when an incapacitated person’s estate lacks sufficient funds. The Court held that fee awards are not available.
Case Overview
The case originated in June 2020, when the Sussex County Division of Social Services, Office of Adult Protective Services (APS), sought a plenary guardianship for “Hank,” an alleged incapacitated person. The court appointed Steven J. Kossup, Esq. to represent Hank and Brian C. Lundquist, Esq. as temporary guardian. Both attorneys took significant steps to stabilize Hank’s life, ensuring he had stable housing, financial aid, and medical care. Despite APS’s recommendation for a permanent plenary guardian, Kossup and Lundquist advocated for a limited guardianship. Their position was supported by an expert psychologist, retained at Lundquist’s expense, who opined that Hank required only a limited guardianship. The trial court ultimately agreed. Kossup and Lundquist then applied for compensation for their services, seeking to have their fees paid by APS, as Hank’s estate lacked sufficient funds. While APS did not contest the amount of the fees, it argued that paying such fees would compromise its ability to serve its clients. The trial court and the Appellate Division denied the fee applications, prompting an appeal to the New Jersey Supreme Court.
Supreme Court’s Analysis
In a unanimous opinion, the New Jersey Supreme Court affirmed the denial of the fee applications. The decision emphasized the following key points:
1. The American Rule and Limited Exceptions
New Jersey adheres to the “American Rule,” which requires litigants to bear their own legal costs unless explicitly authorized by statute or court rule. New Jersey Court Rule 4:42-9(a) provides eight exceptions to the rule, two of which were invoked in this case:
- Statutory Authorization: The Court found that neither the Adult Protective Services Act (APS Act) nor the statutes governing guardianships authorize fee awards against APS. Both statutes limit fee awards to the estate of the incapacitated person.
- Guardianship Rules: Rule 4:42-9(a)(3) and Rule 4:86-4(e) permit fees to be paid from the incapacitated person’s estate or “in such other manner as the court shall direct.” However, the Court clarified that this language does not authorize fee awards against APS.
2. Rejection of the DiNoia Precedent
The Court explicitly declined to adopt the holding in In re Guardianship of DiNoia (2019), where the Appellate Division upheld a fee award against APS. The court in DiNoia ordered APS to pay counsel fees because APS had “protracted the litigation” by failing to provide information in a timely manner, and court-appointed attorney made exceptional efforts on behalf of his client. The Supreme Court held that such reasoning does not align with the American Rule or the governing statutes and rules, and ruled that there is no basis to authorize fee awards against APS under any circumstances, even if it protracted litigation.
3. Pro Bono Service
The Court highlighted the longstanding tradition of pro bono service in guardianship matters, particularly when the incapacitated person’s estate lacks resources. It acknowledged the substantial burden this places on attorneys and urged trial courts to consider the equitable distribution of these assignments.
Practical Guidance for Future Cases
The Court offered several recommendations for handling guardianship matters:
- Clear Communication: Judges should inform attorneys and guardians at the outset if their service is expected to be pro bono.
- Court Oversight: Judges, not Surrogates, are responsible for appointing counsel, determining the need for temporary guardians, and addressing compensation.
- Expert Fees: Temporary guardians serving pro bono should consult the court before retaining experts, ensuring funds are available to cover fees.
Broader Implications
The ruling in In the Matter of A.D. establishes that APS providers cannot be held financially responsible for court-appointed attorney fees, even if APS causes delay and the need for the attorney to perform extraordinary work on the case. While this reinforces the American Rule, it raises questions about the sustainability of pro bono service in guardianship cases, especially given the increasing demand for such legal representation. The Court expressed gratitude for the exemplary work of Kossup and Lundquist but acknowledged the need for systemic changes to address the burdens of pro bono service. This may include increased funding for legal aid programs or other measures to ensure fair allocation of responsibilities. As the population continues to age and demand for guardianship services grow, the legal community and policymakers must work together to ensure equitable and sustainable solutions.
by Jose D. Roman | Jan 15, 2025 | Guardianship
Guardianship is a critical legal tool that allows a person, known as the guardian, to make decisions on behalf of another individual who is unable to do so independently. In New Jersey, guardianship is often sought to protect seniors suffering from dementia, adults with intellectual or developmental disabilities, or other individuals who cannot manage their personal or financial affairs. Guardianship is necessary when a person is unable to sign estate planning documents such as a Power of Attorney, Healthcare Proxy and Living Will. Below, we’ll explore the reasons guardianship may be necessary, the types of guardianship available, and the process of obtaining guardianship in the Garden State.
Why You May Need Guardianship
- Person with Dementia and No Estate Plan: As dementia progresses, individuals may lose the ability to make sound decisions about their healthcare, living arrangements, or finances. Without the assistance of a trusted authorized agent or legal guardian, these individuals may be at risk of exploitation or harm. Guardianship ensures that someone is legally authorized to speak on their behald and protect their interests.
- Adults with Intellectual or Developmental Disabilities: When a child with an intellectual or developmental disability reaches the age of 18, they are legally considered an adult, regardless of their cognitive abilities. Guardianship allows parents or caregivers to continue making decisions for them, ensuring they receive the support they need.
- Individuals with Severe Mental Illness or Injury: In some cases, a person may become incapacitated due to a mental illness, traumatic brain injury, or other conditions. Guardianship enables someone to step in and manage their affairs during their period of incapacity.
Types of Guardianship in New Jersey
New Jersey law recognizes different types of guardianship to address varying levels of need:
- Guardianship of the Person: This grants the guardian authority to make personal decisions, such as those related to healthcare, living arrangements, and education.
- Guardianship of the Estate: This allows the guardian to manage the individual’s financial affairs, including paying bills, managing investments, and handling property.
- Guardianship of the Person and Estate: This is a full guardianship covering both personal and financial decisions. It is typically granted when the individual is deemed completely incapable of managing their affairs.
- Limited Guardianship: For individuals who can make some decisions independently but require assistance with others, the court may grant limited guardianship tailored to their specific needs.
The Guardianship Process in New Jersey
While it is recommended to consult an attorney, there are good self-help forms and guides available on the guardianship resources page of the New Jersey Courts website. Obtaining guardianship in New Jersey involves several legal steps designed to ensure the process is fair and in the best interest of the incapacitated individual:
- Filing a Verified Complaint: The process begins with filing a verified complaint (lawsuit papers) in the Superior Court, Chancery Division – Probate Part, along with supporting documents such as affidavits from two physicians or one physician and a psychologist. These professionals must describe in detail under penalty of perjury how the individual is incapacitated.
- Appointment of an Attorney: The court will appoint an attorney to represent the alleged incapacitated person. The attorney will interview next of kin, review medical records, and prepare a report to the court with recommendations. This ensures their rights are protected during the proceedings.
- Place Next of Kin and Other Necessary Parties on Notice: The verified complaint and supporting documents will need to be served on the alleged incapacitated person, their closest next of kin, and agencies who may be interested in the proceedings such as the Division of Developmental Disabilities.
- Court Hearing: A judge will review the evidence and hear testimony from all parties involved. The court will determine whether the individual is incapacitated and whether guardianship is necessary.
- Issuance of Guardianship Letters: If the court grants guardianship, the guardian will receive Letters of Guardianship, which formally authorize them to act on behalf of the incapacitated person.
- Ongoing Responsibilities: Guardians are required to act in the best interest of the individual and may need to file periodic reports with the court, particularly if they manage the person’s finances.
Alternatives to Guardianship
In many cases, proactive planning with legal documents can help avoid the need for guardianship. Key estate planning documents that will avoid the need for a guardianship include:
- Power of Attorney: A power of attorney is a legal document that allows an individual (the principal) to designate another person (the agent) to make financial and legal decisions on their behalf. This can cover tasks such as managing bank accounts, paying bills, and signing contracts. Establishing a power of attorney while the individual is still capable of making decisions can prevent the need for guardianship.
- Healthcare Proxy: A healthcare proxy, also known as a medical power of attorney, allows an individual to appoint someone to make medical decisions for them if they become incapacitated. This ensures that their healthcare wishes are respected without requiring court intervention.
- Advanced Directives: Advanced directives, including living wills, allow individuals to outline their preferences for medical treatment and end-of-life care. By clearly documenting their wishes, individuals can avoid the need for guardianship and ensure their healthcare decisions align with their values.
- Representative Payee: For managing Social Security benefits, a representative payee may be appointed without the need for full guardianship.
These documents are simple to execute when planned in advance and can often eliminate the need for guardianship proceedings.
Conclusion
Guardianship is a significant responsibility and should be pursued when necessary to protect the well-being of a loved one. In New Jersey, the process ensures that the rights of the incapacitated individual are safeguarded while providing the guardian with the legal authority to make critical decisions. If you’re considering guardianship, consult with an experienced attorney to navigate the legal process and explore the best options for your situation.